The G7 group of rich countries will not seek coordinated action to boost growth, despite growing fears of a global economic slowdown prompted by the US sub-prime mortgage crisis, the chancellor of the exchequer, Alistair Darling, said yesterday. Darling, who is in Tokyo for today’s meeting of G7 finance chiefs, said it was up to individual countries to take action depending on their circumstances.
"The conditions in different countries are not the same," he told reporters. "The actions in different countries will be different depending on their particular circumstances."
With Japan and other European nations taking a similar line, there is little chance of a joint response to US calls to take swift action to boost domestic demand, or to an International Monetary Fund proposal to implement tax cuts. Instead, Darling expected the talks to focus on how to promote greater transparency among financial institutions about their losses, and on the role of credit ratings agencies.
Last month, the US Federal Reserve cut interest rates by a total of 1.25 percentage points in an attempt to ward off recession. Darling, however, all but ruled out agreement on a G7-wide fiscal stimulus package in Tokyo. "Other countries are not in the same position and they will take the appropriate action," he said.
In an interim report today, the Financial Stability Forum, a group of central banks, regulators and international bodies, will propose reforms, including a call for big financial institutions to show greater transparency about their credit losses.
The Japanese finance minister, Fukushiro Nukaga, said he hoped serious discussion of the US mortgage crisis could help calm financial markets after weeks of turmoil in London, New York and Tokyo.
Despite the obvious concern about the possibility of a slowdown, Nukaga said, "It is important that we issue a firm message of global economic expansion and to secure market stability through international coordination.
"I also want to discuss information disclosure by financial institutions, ways to make up for their losses and how we will provide a feeling of security in the market."
A draft of the G7 communique to be issued today says the world is facing "a more challenging and uncertain environment" than when the ministers met last October, but that economic fundamentals remain "solid", according to Reuters.
Britain, Japan and the US hope to enlist G7 support for plans to launch a multi billion-dollar fund to promote clean energy technologies in the developing world.